11 Sep 2009

The top ten headlines for the last week have invariably included the recent spate relating to Jet Airways. Recent because this is not for the first time that Jet has been brought into the glare with its handling of the pilots. But then who are we to comment on how the management of the company should take place? It is a liberalized economy and business has the sole prerogative on how it should be run. Is it? Well, that is the moot point sought to cover in this post; from the legal angle ofcourse.

Let us start with the basics. The recession has been here in the economy for a while. Not just India, the world economies have also been affected by the downturn of events. Naturally losses have piled and equities have began to shrink. The margins on which business has been done, have come down and as a result the stakeholders and not just the shareholders (click here to read earlier rumblings of this blog on the difference between the two) have all been affected by the trumoil. The corollary which follows is that the losses got to be shared. All those being hit by the down-turn are required to adjust with reduced allowances so long as the markets remain dull. Those who carried fat salaries earlier when the markets soared and profit levels were high, have to take home lesser cash till the time loss-making continues.

So what has Jet done. If industry reports are to be believed, aviation industry is one of the biggest losers in this recession. With operating costs high and the intensity of competition not allowing much to be carried back, the pays of the employees have been remained at the levels (if not cut down) while in the normal course of events hefty increments would have been the order of the day. So when the Jet management decided to cut the salaries of the pilots, it made business sense. However in case of pilots, traditional notions of labour market do not apply. When the actual operation and control of the aircrafts are in the hands of the pilots, they carry with them greater bargaining power than let us say the ground-staff etc. Thus came the tussle.

The pilots, what were they asking. If television reports are to be believed, all they sought was the right to form a Union; pilots union i.e. Unheard of in the recent times but not out of bounds. Indian labour (and employee) laws confer this precious right to the working class; make unions to organise the ranks and obtain bargaining power in as much as the negotiation with the management regarding pays, conditions of work etc. are concerned. The Constitution of India, the source of all laws in India, recognizes such right as the fundamental right of every citizen. The relevant part of Article 19 states: "All citizens shall have the right ... to form associations and unions". However all hell broke lose when the Jet pilots sought to form a union and the two senior pilots pioneering their cause were sacked for these efforts.

Thus if the Jet pilots decided to form an association, who could stop them from doing so? Certainly not Jet management, for they cannot deny a citizen of his constitutional rights. However the Government could, for the Constitution itself provides [Article 19(3)] that such right to form associations or unions shall not "affect the operation of any existing law in so far as it imposes, or prevents the State from making any law imposing, in the interests of the sovereignty and integrity of India or public order or morality, reasonable restrictions" on exercise of such rights. And there does exist a law to this effect.

The Essential Services Maintenance Act of 1981 gives the power to the Central Government to prohibit a strike etc. in case of an essential service. Any service in relation to the operation, repair or maintenance of an aircraft is covered within the purview of essential service and the "cessation of work by a body of persons while employed in any essential service acting in combination or a concerted refusal or a refusal under a common understanding of any number of persons who are or have been so employed to continue to work or to accept work assigned" is also understood as a 'strike' within the meaning of the legislation.

Thus the Government had the power to intervene but only in case the pilot strikes went overboard and disturbed the aviation industry as a whole. In as much as the Government has chosen to keep its mum and not to interfere in the exercise of its executive power, so be it. However in as much as it has pulled its strings and sought the management to reconsider its stand, it has indeed set the ball rolling for reconcilation. Had that been a traditional management-trade union dispute, the Industrial Disputes Act might also have been triggered, forcing the disputing parties to enter into a dialogue at an open forum in the nature of mediation, conciliation or worse; an industrial dispute.

The matter has already become sub-judice with the Bombay High Court having restrained the pilots from striking. But then, the irony lies in the fact that while the Government is looking out for standardizing the employee pensions and for effective fiscal planning, on the private-employment frontier the employees have to negotiate even for salaries. A look at the recent report of the 13th Finance Commission on Employee Pension shows how serious the Government is in building up the employee and pensioners database towards a sound fiscal management. One can only hope that private players emulate and further the cause of employee-satisfaction and provide optimum working conditions.

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